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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
) File No. EB-09-SE-218
Verizon ) NAL/Acct No. 201032100034
) FRN 0010790335
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: July 8, 2010 Released: July 9, 2010
By the Chief, Enforcement Bureau:
I. INTRODUCTION
1. In this Notice of Apparent Liability for Forfeiture ("NAL"), we find
that Verizon apparently willfully violated Section 4.11 of the
Commission's Rules ("Rules"), by failing to file a true, complete and
accurate Final Communications Outage Report regarding a significant
disruption in its network services ("outage"). Based on the facts and
circumstances before us, we conclude that Verizon is apparently liable
for a forfeiture in the amount of twenty-five thousand dollars
($25,000).
II. BACKGROUND
2. The Commission first imposed outage reporting requirements on wireline
communications providers in 1992. Recognizing that these requirements
address critical public interest concerns, the Commission later
revised its rules to extend these mandatory reporting requirements to
all communications providers. In addition, in an effort to facilitate
rapid reporting and reduce administrative burdens on covered entities,
the Commission adopted a common metric for determining the general
outage-reporting threshold criteria and required that outage reports
be timely filed electronically. The Commission explained that these
requirements enable this agency to effectively monitor and oversee the
reliability and security of the nation's communications systems, and
thus carry out its responsibilities under the Communications Act. Most
important, the outage reporting requirements ensure that communication
providers promptly, fully, and accurately report significant
disruptions in their network services that could affect our Nation's
"homeland security, public health and safety, as well as [our]
economic well-being." The Commission concluded that the outage
reporting requirements, as strengthened and expanded, ensure that the
public has "secure communications that they can rely upon for their
daily needs, as well as during terrorist attacks, fires, natural
disasters (such as hurricanes, earthquakes, and tornadoes) and war;"
and that the Commission has the information about "communications
disruptions and their causes" to prevent similar future disruptions
and to facilitate alternative communications sources.
3. Under Section 4.9 of the Rules, all communications providers are
required to electronically report to the Commission outages that meet
certain threshold criteria. The threshold criteria for wireline
communications providers are set forth in Section 4.9(f) of the Rules.
A wireline communications provider must notify the Commission of any
outage that lasts at least 30 minutes and: (1) potentially affects at
least 900,000 user telephony or paging minutes; (2) affects at least
1,350 DS3 minutes; (3) potentially affects any special offices or
facilities; or (4) potentially affects 911 facilities. If a wireline
communications provider experiences an outage that meets the threshold
criteria, it is required to electronically submit to the Commission a
Notification within 120 minutes, an Initial Communications Outage
Report ("Initial Report") within 72 hours, and a Final Communications
Outage Report ("Final Report") within 30 days of its discovery of the
outage. The Notification serves to notify the Commission that a major
event has occurred and assist the Commission in determining whether an
immediate response is required (e.g., terrorist attack or systemic
failure) and whether patterns of outages are emerging (e.g., phased
terrorist attacks) that warrant further coordination or other action.
The Initial and Final Reports provide the Commission with more
detailed data necessary to analyze outages in order to improve network
reliability and security.
4. Under Section 4.11 of the Rules, the Final Report must "contain all
pertinent information on the outage, including any information that
was not contained in the Initial Report." Section 4.11 of the Rules
requires that "the person submitting the Final report ... be
authorized by the provider to legally bind the provider to the truth,
completeness, and accuracy of the information contained in the
report." Section 4.11 further requires that the Final Report "be
attested by the person submitting the report that he/she has read the
report prior to submitting it and on oath deposes and states that the
information contained therein is true, correct, and accurate to the
best of his/her knowledge and belief and that the communications
provider on oath deposes and states that this information is true,
complete, and accurate."
5. Verizon, a wireline communications provider, has been subject to the
outage reporting requirements described above since the requirements
were first imposed in 1992. Commission records reflect that Verizon
experienced a significant outage, for which it submitted timely
reports, but for which its Final Report was incomplete and inaccurate
in several important respects. On January 4, 2010, the Enforcement
Bureau's Spectrum Enforcement Division issued Verizon a Letter of
Inquiry ("LOI") and initiated an investigation into the company's
compliance with Section 4.11 of the Rules. In its response to the LOI,
Verizon maintains that its Final Report was accurate and thus complied
with Section 4.11. We disagree. Having reviewed Verizon's LOI Response
and Final Report, we find that Verizon's submission did not completely
and accurately describe the outage in several important respects, and
thus that it did not comply with the requirements of Section 4.11 of
the Rules.
III. DISCUSSION
A. Verizon Apparently Failed to File a Complete and Accurate Final Outage
Report
6. Section 4.9 of the Rules requires Verizon to timely file reports for
outages that meet the threshold criteria. Section 4.11 of the Rules
requires Verizon to submit, and attest that it has submitted, a true,
complete and accurate Final Report that contains all pertinent
information, including any information that was not contained in its
Initial Report. The completeness and accuracy of the Final Report is
critical in enabling the Commission to assess the full impact of
significant communications disruptions and to effectively respond to
future incidents.
7. Verizon experienced a reportable network outage, as described in the
Confidential Appendix. Commission records reflect that Verizon timely
filed its Reports, including its Final Report, regarding that outage.
The issue presented here is not the timeliness of Verizon's filings
but rather the completeness and accuracy of its Final Report. As
detailed more fully in the Confidential Appendix, we find that
Verizon's Final Report was incomplete and inaccurate in several
important respects. We
therefore find that Verizon apparently willfully violated Section 4.11 of
the Rules by filing a Final Report that was not true, complete and
accurate.
B. Proposed Forfeiture
8. Under Section 503(b)(1)(B) of the Act and Section 1.80(a)(1) of the
Rules, any person who is determined by the Commission to have
willfully or repeatedly failed to comply with any provision of the Act
or any rule, regulation, or order issued by the Commission shall be
liable to the United States for a forfeiture penalty. To impose such a
forfeiture penalty, the Commission must issue a notice of apparent
liability and the person against whom such notice has been issued must
have an opportunity to show, in writing, why no such forfeiture
penalty should be imposed. The Commission will then issue a forfeiture
if it finds by a preponderance of the evidence that the person has
violated the Act or a Commission rule. We conclude under this standard
that Verizon is apparently liable for forfeiture for its apparent
willful violation of Section 4.11 of the Rules.
9. Under Section 503(b)(2)(B) of the Act, we may assess a common carrier
a maximum forfeiture of $150,000 for each violation, or each day of a
continuing violation, up to a statutory maximum of $1,500,000 for any
single continuing violation. In determining the appropriate forfeiture
amount, Section 503(b)(2)(E) of the Act directs the Commission to
consider factors, such as "the nature, circumstances, extent and
gravity of the violation, and, with respect to the violator, the
degree of culpability, any history of prior offenses, ability to pay,
and such other matters as justice may require."
10. The Commission's Forfeiture Policy Statement and Section 1.80 of the
Rules do not establish a base forfeiture amount for failing to submit
a true, complete and accurate Final Report as required under Section
4.11 of the Rules. This does not, of course, mean that no forfeiture
should be imposed. The Forfeiture Policy Statement states that "...
any omission of a specific rule violation from the ... [forfeiture
guidelines] ... should not signal that the Commission considers any
unlisted violation as nonexistent or unimportant. The Commission
retains the discretion to issue forfeitures on a case-by-case basis,
under its general forfeiture authority contained in Section 503 of the
Act.
11. In determining the appropriate forfeiture amount for violation of the
reporting requirements under Section 4.11, we start by taking into
account the importance of filing a true, complete and accurate Final
Report, such that the Commission can rely fully on the accuracy of
that report. In other analogous circumstances, the Commission has
emphasized that it relies "heavily on the truthfulness and accuracy of
the information provided to us. If information submitted to us is
incorrect, we cannot properly carry out our statutory
responsibilities." It is because of this need to be able to rely on
the information submitted to us that the Commission requires that the
Final Report of a reportable outage must be "attested by the person
submitting the report that he/she has read the report prior to
submitting it and on oath deposes and states that the information
contained therein is true, correct and accurate to the best of his/her
knowledge and belief and that the communications provider on oath
deposes and states that this information is true, complete and
accurate."
12. We have considered the nature of Verizon's apparent violation, the
submission of an attested Final Report that, although timely filed,
was incomplete and inaccurate in several important respects. As the
Commission has found in other reporting violation cases involving the
lack of accuracy and completeness, we believe a significant forfeiture
is appropriate here. If communications providers ignore our rules and
submit unreliable information, the purpose of the network outage
reporting requirements is undermined. Consistent with similar
precedent, we find that a forfeiture in the amount of $25,000 is
appropriate under the circumstances presented in this case.
13. Specifically, we take into account that the Commission's outage
reporting requirements, generally, and the completeness and accuracy
of the Final Report, specifically, are critical in enabling the
Commission to assess the full impact of significant communications
disruptions and to effectively respond to future incidents. The
submission of a less than complete and accurate Final Report
undermines the Commission's understanding of and ability to address
outages that have the potential of jeopardizing our nation's homeland
security, safety and economic well-being. A communications provider
that submits incomplete and inaccurate information shows a lack of due
diligence in meeting its reporting obligations under Section 4.11 of
the Rules. An inaccurate and incomplete Final Report does not meet the
requirements of Section 4.11. Finally, such a Final Report impedes the
Commission's thorough analysis and understanding of the effects of an
outage, and compromises the Commission's long-term interests of
ensuring network reliability and security. Accordingly, for the
reasons discussed above and in the Confidential Appendix, we conclude
that Verizon is apparently liable for a $25,000 forfeiture for its
apparent willful violation of Section 4.11 of the Rules.
V. ORDERING CLAUSES
14. ACCORDINGLY, IT IS ORDERED that, pursuant to Section 503(b) of the
Act, and Section 1.80 of the Rules, Verizon is hereby NOTIFIED of its
APPARENT LIABILITY FOR A FORFEITURE in the amount of twenty-five
thousand ($25,000) for its apparent willful violation of Section 4.11
of the Rules.
15. IT IS FURTHER ORDERED that, pursuant to Section 1.80 of the Rules,
within thirty days of the release date of this Notice of Apparent
Liability for Forfeiture, Verizon SHALL PAY the full amount of the
proposed forfeiture or SHALL FILE a written statement seeking
reduction or cancellation of the proposed forfeiture.
16. Payment of the forfeiture must be made by check or similar instrument,
payable to the order of the Federal Communications Commission. The
payment must include the NAL/Account Number and FRN Number referenced
above. Payment by check or money order may be mailed to Federal
Communications Commission, P.O. Box 979088, St. Louis, MO 63197-9000.
Payment by overnight mail may be sent to U.S. Bank - Government
Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO
63101. Payment by wire transfer may be made to ABA Number 021030004,
receiving bank TREAS/NYC, and account number 27000001. For payment by
credit card, an FCC Form 159 (Remittance Advice) must be submitted.
When completing the FCC Form 159, enter the NAL/Account number in
block number 23A (call sign/other ID), and enter the letters "FORF" in
block number 24A (payment type code). Requests for full payment under
an installment plan should be sent to: Chief Financial Officer --
Financial Operations, 445 12th Street, S.W., Room 1-A625, Washington,
D.C. 20554. Please contact the Financial Operations Group Help Desk at
1-877-480-3201 or Email: ARINQUIRIES@fcc.gov with any questions
regarding payment procedures. Verizon will also send electronic
notification on the date said payment is made to
Jennifer.Burton@fcc.gov and JoAnn.Lucanik@fcc.gov.
17. The written statement seeking reduction or cancellation of the
proposed forfeiture, if any, must include a detailed factual statement
supported by appropriate documentation and affidavits pursuant to
Sections 1.80(f)(3) and 1.16 of the Rules. The written statement must
be mailed to the Office of the Secretary, Federal Communications
Commission, 445 12th Street, S.W., Washington, D.C. 20554, ATTN:
Enforcement Bureau - Spectrum Enforcement Division, and must include
the NAL/Acct. No. referenced in the caption. The statement should also
be emailed to JoAnn Lucanik at JoAnn.Lucanik@fcc.gov and Jennifer
Burton at Jennifer.Burton@fcc.gov.
18. The Commission will not consider reducing or canceling a forfeiture in
response to a claim of inability to pay unless the petitioner submits:
(1) federal tax returns for the most recent three-year period; (2)
financial statements prepared according to generally accepted
accounting practices; or (3) some other reliable and objective
documentation that accurately reflects the petitioner's current
financial status. Any claim of inability to pay must specifically
identify the basis for the claim by reference to the financial
documentation submitted.
19. IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability
for Forfeiture shall be sent by first class mail and certified mail
return receipt requested to Mark J. Montano, Assistant General
Counsel, Verizon, 1320 North Courthouse Road, 9th Floor, Arlington,
Virginia 22201.
FEDERAL COMMUNICATIONS COMMISSION
P. Michele Ellison
Chief, Enforcement Bureau
47 C.F.R. S: 4.11.
See Notification by Common Carriers of Service Disruptions, Report and
Order, 7 FCC Rcd 2010 (1992); Memorandum Opinion and Order and Further
Notice of Proposed Rulemaking, 8 FCC Rcd 8517 (1993); Second Report and
Order, 9 FCC Rcd 3911 (1994); Order on Reconsideration of Second Report
and Order, 10 FCC Rcd 11764 (1995).
See 47 C.F.R. Part 4; see also New Part 4 of the Commission's Rules
Concerning Disruptions to Communications, Report and Order and Further
Notice of Proposed Rulemaking, 19 FCC Rcd 16830, 16882-94 P:P: 97-126
(2004) ("2004 Network Outage Order") (extending the network outage
reporting requirements to paging and wireless, cable circuit-switch
telephony, and satellite communications providers).
Id. at 16869-72 P:P: 71-75.
Id. at 16837 P: 12.
Id. at 16910 P: 160.
2004 Network Outage Order, 19 FCC Rcd at 16837 P: 11. Noting that there
are many examples of the critical need for, and our dependence upon,
reliable communications service, the Commission offered the example of our
financial infrastructure, which largely consists of computers, databases,
and communications links. The Commission stated that:
If the communications links were severed, or severely degraded, ATM
machines would not be able to supply cash, credit card transactions would
not `go through,' banks would not be able to process financial
transactions (including checks), and the financial markets would become
dysfunctional. In a short time, economic activity would ground to a halt
and consumers' ability to purchase food, fuel or clothing would be
severely limited if not destroyed.
Id. at 16836-37 P: 11.
Id.
47 C.F.R. S: 4.9(f)(1)-(4). A wireline communications provider is defined
as a provider that "offer[s] terrestrial communications through direct
connectivity, predominantly by wire, coaxial cable, or optical fiber,
between the serving central office ... and end user location(s)." See 47
C.F.R. S: 4.3(g).
See 47 C.F.R. S: 4.9(f)(4).
See 2004 Network Outage Order, 19 FCC Rcd at 16870-72 P:P: 73-75.
See id.
47 C.F.R. S: 4.11.
Id.
Id.
See Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement Division,
Enforcement Bureau to Kathleen Grillo, Vice President, Federal Regulatory,
Verizon (January 4, 2010).
See Letter from Mark J. Montano, Assistant General Counsel, Verizon to
Kathryn S. Berthot, Chief, Spectrum Enforcement Division, Enforcement
Bureau (February 3, 2010). Verizon requested its Response and associated
documents be accorded confidential treatment. Pursuant to 47 C.F.R. S:
0.457(d)(vi), Verizon's outage report is not routinely available for
public inspection. Pursuant to 47 C.F.R. S: 0.459(d)(3), we will accord
the other materials confidential treatment until any request for
inspection is made, and will rule on Verizon's request at that time.
"Willful" is defined as the "the conscious and deliberate commission or
omission of [any] act, irrespective of any intent to violate" the law. 47
U.S.C. S: 312(f)(1). The legislative history of Section 312(f)(1) of the
Act clarifies that this definition of willful applies to both Sections 312
and 503(b) of the Act, H.R. Rep. No. 97-765, 97th Cong. 2d Sess. 51
(1982), and the Commission has so interpreted the term in the Section
503(b) context. See Southern California Broadcasting Co., Memorandum
Opinion and Order, 6 FCC Rcd 4387, 4388 P:5 (1991), recon. denied,
Memorandum Opinion and Order, 7 FCC Rcd 3454 (1992) ("Southern
California"); see also San Jose Navigation, Inc., Forfeiture Order, 22 FCC
Rcd 1040, 1042 P: 9 (2007), consent decree ordered, 25 FCC Rcd 1494
(2010); Lotus Broadcasting Corp., Memorandum Opinion and Order, 9 FCC 2d
227 P:P: 5-6 (1967); Bureau D'Electronique Appliquee, Forfeiture Order, 20
FCC Rcd 17893 (Spectrum Enf. Div., Enf. Bur. 2005). By consciously and
deliberately submitting a Final Report that was incomplete and inaccurate
in several respects, Verizon's apparently willfully violated Section 4.11
of the Rules.
47 U.S.C. S: 503(b)(1)(B); 47 C.F.R. S: 1.80(a)(1).
47 U.S.C. S: 503(b); 47 C.F.R. S: 1.80(f).
See, e.g., SBC Communications, Inc., Forfeiture Order, 17 FCC Rcd 7589,
7591, P: 4 (2002).
47 U.S.C S: 503(b)(2)(B). The Commission thrice amended Section 1.80(b)(3)
of the Rules, 47 C.F.R. S: 1.80(b)(3), to increase the maximum forfeiture
amounts, in accordance with the inflation adjustment requirements
contained in the Debt Collection Improvement Act of 1996, 28 U.S.C. S:
2461. See Amendment of Section 1.80 of the Commission's Rules and
Adjustment of Forfeiture Maxima to Reflect Inflation, Order, 23 FCC Rcd
9845 (2008); Amendment of Section 1.80 of the Commission's Rules and
Adjustment of Forfeiture Maxima to Reflect Inflation, Order, 19 FCC Rcd
10945 (2004); Amendment of Section 1.80 of the Commission's Rules and
Adjustment of Forfeiture Maxima to Reflect Inflation, Order, 15 FCC Rcd
18221 (2000); see also 47 C.F.R. S: 1.80(c).
47 U.S.C. S: 503(b)(2)(E). See also 47 C.F.R. S: 1.80(b)(4), Note to
paragraph (b)(4): Section II. Adjustment Criteria for Section 503
Forfeitures.
See The Commission's Forfeiture Policy Statement and Amendment of Section
1.80 of the Rules to Incorporate the Forfeiture Guidelines, Report and
Order, 12 FCC Rcd 17087 (1997), recon. denied, 15 FCC Rcd 303 (1999)
("Forfeiture Policy Statement").
Forfeiture Policy Statement, 12 FCC Rcd at 17099 P: 22.
See id.
Amendment of Section 1.17 of the Commission's Rules Concerning Truthful
Statements to the Commission, Notice of Proposed Rulemaking, 17 FCC Rcd
3296, 3297 (2002). See also Amendment of Section 1.17 of the Commission's
Rules Concerning Truthful Statements to the Commission Report and Order,
18 FCC Rcd 4016, 4021 (2003), recon. denied, Memorandum Opinion and Order,
19 FCC Rcd 5790, further recon. denied, Memorandum Opinion and Order, 20
FCC Rcd 1250 (2004).
47 C.F.R. S: 4.11.
Serious reporting violations by carriers have resulted in assessments of
significant forfeitures. See e.g., VCI Company, Notice of Apparent
Liability for Forfeiture, 22 FCC Rcd 15933, 15940 P: 18 (2007) (Commission
established $20,000 as the base forfeiture amount for a carrier's failure
to file accurate revenue on FCC Form 497, proposing a $320,000 forfeiture
for VCI's sixteen apparent violations); Global NAPs California, Inc.,
Notice of Apparent Liability for Forfeiture, 24 FCC Rcd 13545, 13554-56
P:P: 24-27 (Enf. Bur. 2009) (assessing $25,000 proposed forfeiture against
a carrier for apparently violating Section 52.15(f) of the Rules, 47
C.F.R. S: 52.15(f), finding that filing of inaccurate reports undermines
the Commission's ability to monitor and ensure the efficient allocation of
telephone numbering resources) ("Global NAPs California, Inc."); Cardinal
Broadband LLC, aka Sovereign Telecommunications, Notice of Apparent
Liability for Forfeiture, 23 FCC Rcd 12233, 12235-37 P:P: 6-11 (Enf. Bur.
2008) (assessing a $25,000 forfeiture against an interconnected VoIP
service provider for apparently violating Section 1.17 of the Rules,
finding that the submission of misleading or inaccurate information
regarding its status reflects a lack of due diligence and impedes the
Commission's ability to carry out its statutory responsibilities)
("Cardinal Broadband LLC").
See Global NAPs California, Inc., 24 FCC Rcd at 13554-56 P:P: 24-27;
Cardinal Broadband LLC, 23 FCC Rcd at 12235-37 P:P: 6-11.
See supra notes 9 - 12 and accompanying text.
Federal Communications Commission DA 10-1268
7
Federal Communications Commission DA 10-1268